Public Act 102-0230
 
SB1795 EnrolledLRB102 00032 KTG 13828 b


  
    AN ACT concerning business.
  
 
    Be it enacted by the People of the State of Illinois,
 
represented in the General Assembly:
  
 
 
    Section 5. The Limited Liability Company Act is amended  by 
changing Sections 15-3 and 15-5 as follows:
 


    (805 ILCS 180/15-3)




    Sec. 15-3. General standards of member and manager's 
conduct. 

    (a) Without limiting any fiduciary duties owed at common 
law, the The fiduciary duties a member owes to a 
member-managed company and its
other members include the duty 
of loyalty and the duty of care referred to in
subsections (b) 
and (c) of this Section.

    (b) A member's duty of loyalty to a member-managed company 
and its other
members includes the following:

        (1) to account to the company and to hold as trustee 
    for it any property,
profit, or benefit derived by the 
    member in the conduct or winding up of the
company's 
    business or derived from a use by the member of the 
    company's
property, including the appropriation of a 
    company's opportunity;

        (2) to act fairly when a member deals with the company 
    in the conduct or
winding up of the company's business as 
    or on behalf of a party having an
interest adverse to the 
    company; and

        (3) to refrain from competing with the company in the 
    conduct of the
company's business before the dissolution 
    of the company.

    (c) A member's duty of care to a member-managed company 
and its other
members in the conduct of and winding up of the 
company's business is limited to
refraining from engaging in 
grossly negligent or reckless conduct, intentional
misconduct, 
or a knowing violation of law.

    (d) The implied contractual covenant of good faith and 
fair dealing applies to the operating agreement and members of 
a member-managed company in the same manner and to the same 
extent that it applies at law to other contracts and parties to 
the contracts. A member shall discharge his or her duties to a 
member-managed company
and its other members under this Act or 
under the operating agreement and
exercise any rights 
consistent with the obligation of good faith and fair
dealing.

    (e) A member of a member-managed company does not violate 
a duty or
obligation under this Act or under the operating 
agreement merely because the
member's conduct furthers the 
member's own interest.

    (f) This Section applies to a person winding up the 
limited liability
company's business as the personal or legal 
representative of the last
surviving member as if the person 
were a member.

    (g) In a manager-managed company:

        (1) a member who is not also a manager owes no duties 
    to the company or to
the other members solely by reason of 
    being a member;

        (2) a manager is held to the same standards of conduct 
    prescribed for
members in subsections (b), (c), (d), and 
    (e) of this Section;

        (3) a member who exercises some or all of the 
    authority of a manager in the and conduct of the company's 
    business is held to the standards of conduct in 
    subsections (b),
(c), (d), and (e) of this Section; and

        (4) a manager is relieved of liability imposed by law 
    for violations of
the
standards prescribed by subsections

    (b), (c), (d), and (e) to the extent of the managerial 
    authority delegated to
the members by the operating 
    agreement; and .

        (5)    subsection (d) of this Section applies to the 
    operating agreement and members and managers of the 
    company. 
(Source: P.A. 99-637, eff. 7-1-17.)

 


    (805 ILCS 180/15-5)


    Sec. 15-5. Operating agreement. 

    (a) All
members of a
limited liability company may enter 
into an operating agreement to
regulate the affairs of the 
company and the conduct of its business and to
govern 
relations among the members, managers, and company. The 
operating agreement may establish that a limited liability 
company is a manager-managed limited liability company and the 
rights and duties under this Act of a person in the capacity of 
a manager.  To the extent
the operating agreement does not 
otherwise provide, this Act governs relations
among the 
members, managers, and company.
Except as provided in 
subsections (b), (c), (d), and (e) of this Section, an 
operating agreement
may modify any provision or provisions of 
this Act governing relations among
the members, managers, and 
company.

    (b) The operating agreement may not:

        (1) unreasonably restrict a right to information or 
    access to records
under
Section 1-40 or Section 10-15;

        (2) vary the right to expel a member in an event 
    specified in subdivision
(6) of Section
35-45;

        (3) vary the requirement to wind up the limited 
    liability company's
business
in a case specified in 
    subdivision (4), (5), or (6) of subsection (a) of Section 
    35-1;

        (4) restrict rights of a person, other than a manager, 
    member, and
transferee of a member's distributional 
    interest, under this Act;

        (5) restrict the power of a member to dissociate under 
    Section 35-50,
although an operating agreement may

    determine whether a dissociation is wrongful under Section 
    35-50;

        (6) (blank);



        (6.5) eliminate or reduce the obligations or purposes 
    a low-profit limited liability company undertakes when 
    organized under Section 1-26; 
        (7) eliminate or reduce the implied contractual 
    covenant obligation of good faith and fair dealing
under

    subsection (d) of Section 15-3, but the operating 
    agreement may determine the
standards by which the 
    performance of the member's or manager's duties or the 
    exercise of the member's or manager's rights is to be 
    measured;
        (8)  eliminate, vary, or restrict the priority of a 
    statement of authority over provisions in the articles of 
    organization as provided in subsection (h) of Section 
    13-15;
        (9)  vary the law applicable under Section 1-65;
        (10)  vary the power of the court under Section 5-50; 
    or
        (11)  restrict the right to approve a merger, 
    conversion, or domestication under Article 37 or the 
    Entity Omnibus Act of a member that will have personal 
    liability with respect to a surviving, converted, or 
    domesticated organization.
    (c) In addition, with respect to fiduciary duties, the  The 
operating agreement may:
        (1) may not  restrict or eliminate a fiduciary duty 
    owed at common law or under this Act, unless , other than 
    the duty of care described in subsection (c) of Section 
    15-3, but only to the extent the restriction or 
    elimination in the operating agreement is clear and 
    unambiguous;
        (2) may not restrict or eliminate the fiduciary duty 
    described in paragraph (2) of subsection (b) of Section 
    15-3, except in the manner described in paragraph (4) of 
    this subsection (c);  identify specific types or categories 
    of activities that do not violate any fiduciary duty; and
        (3) may not  alter the duty of care, except to 
    authorize intentional misconduct or knowing violation of 
    law; and .
        (4)   may identify, subject to paragraph (1), specific 
    types or categories of activities or provide one or more 
    examples of activities that do not violate any fiduciary 
    duty described in subsection (b) of Section 15-3 or any 
    fiduciary duty owed at common law and may determine 
    standards by which the performance of the fiduciary duty 
    is to be measured. 
    The changes made to paragraphs (2) and (4) of this 
subsection by this amendatory Act of the 102nd General 
Assembly apply to: (i) any operating agreement entered into 
before the effective date of this amendatory Act of the 102nd 
General Assembly if the fiduciary duties of the members or 
managers of the company described in paragraph (2) of 
subsection (b) of Section 15-3 are modified in any respect on 
or after the effective date of this amendatory Act of the 102nd 
General Assembly; and (ii) any operating agreement entered 
into on or after the effective date of this amendatory Act of 
the 102nd General Assembly. 
    (d)  The operating agreement may specify the method by 
which a specific act or transaction that would otherwise 
violate the duty of loyalty may be authorized or ratified by 
all the members or by one or more disinterested and 
independent members or persons after full disclosure of all 
material facts.
    (e)  The operating agreement may alter or eliminate the 
right to payment or reimbursement for a member or manager 
provided by Section 15-7 and may eliminate or limit a member or 
manager's liability to the limited liability company and 
members for money damages, except for:
        (1)  subject to subsections (c) and (d) of this 
    Section, breach of the duties as required in subdivisions 
    (1), (2), and (3) of subsection (b) of Section 15-3 and 
    subsection (g) of Section 15-3;
        (2)  a financial benefit received by the member or 
    manager to which the member or manager is not entitled;
        (3)  a breach of a duty under Section 25-35;
        (4)  intentional infliction of harm on the company or a 
    member; or
        (5)  an intentional violation of criminal law.
    (f)  A limited liability company is bound by and may 
enforce the operating agreement, whether or not the company 
has itself manifested assent to the operating agreement.
    (g)  A person that becomes a member of a limited liability 
company is deemed to assent to the operating agreement.
    (h)  An operating agreement may be entered into before, 
after, or at the time of filing of articles of organization 
and, whether entered into before, after, or at the time of the 
filing, may be made effective as of the time of formation of 
the limited liability company or as of the time or date 
provided in the operating agreement.





(Source: P.A. 99-637, eff. 7-1-17; 100-561, eff. 7-1-18.)